(For me, the answer is usually simple - First Drafts are ALWAYS rewritten)
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So you've written a book, and have let it sit for the prescribed three months. You've pulled it out and read it over. It is a complete mess, just as you feared.
Now, you have two choices. Do you rewrite the book completely from scratch, or do you just give it a thorough edit? Well, I'm here to help.
First of all, the difference between rewriting and editing -
Rewriting: Tossing out the previous draft and writing a new, and sometimes completely different version on the story.
Editing: Keeping this draft, but going through and making smaller changes. It may include writing a few scenes, but, on the whole, the book will remain intact.
So what do you need to do with your book?
First of all, determine what kind of mess it's in. Do you just a ton of really bad grammar, or is there a gaping plot hole because you thought of this really cool plot twist and ... it kinda messed up what had happened previously? If it's just bad grammar, an edit's all that you need. If it's the plot hole, then it depends on the severity.
Second of all, ask yourself, what do I wish that I had done differently? Perhaps you don't like the prince's personality. Or maybe you think that, maybe, the dragon should have lived instead of dying. Or maybe you think that the proposal scene would be better with a party cannon.
Now determine the severity of those changes that you need to make. If they're confined to one scene, or maybe just two or three scenes, you probably just need an edit. If it's something big, like changing a character's personality, then that will need a rewrite.
Also, where a change will occur is important. If your novel's beginning calls for the big changes, you probably need to rewrite, while, if those changes are closer to the end, you could probably just get away with an edit.
But perhaps you determine that your story needs to be somewhere in the middle. You have a small change that, yes, affects every scene in the book - you decided to give your lead lady a sword instead of a bow, say - but it's not really going to affect the plot. Well, for that I recommend the copying method. I did this with Do You Take This Quest, Sew, It's a Quest's revision, and every book that I have written in a notebook. In fact, sometimes I write in notebooks with the intention of forcing myself to do this step.
Because, basically, it's copying the story into a new document, retyping every word. I do this either by, (a) having the book in a notebook, or (b) sending the document to my kindle and typing it up from there. Cait Drews, from Paper Fury, turns her document red, and then retypes the whole thing, slowly turning it black.
So baseline - Rewrite or Edit? It depends on what changes you need to make, their severity, and where they are. Hope this helps.
Do you prefer rewrites or edits? I personally love both.